The semi-state rail company said yesterday that just 25 people a day used the service and it was difficult to see numbers increasing.

While no official decision has been made, it is understood that services will be "suspended" indefinitely in the coming weeks.

It is also understood that roughly the same number of staff work the line as passengers use the service every day, and that fares cover just 2pc of the operating costs.

The last passenger line to close was the Ennis to Athenry and Claremorris service in April 1976.

Ironically, the Ennis to Athenry section re-opens at the end of this month as part of a new Galway to Limerick service.

The Rosslare to Waterford line has been in operation since 1906 and trains stop at Campile, Ballycullane, Wellington Bridge and Bridgetown.

There is currently a morning commuter service from Rosslare to Waterford, with a return service in the evening.

The move comes after a reduction in funding to Iarnrod Eireann which had its annual subvention reduced to €276m, down €27m. In addition the sugar beet freight business, which sustained the viability of the line, ceased in 2006 after Irish Sugar closed.

"There's very low population along the line. The potential for any future business is difficult to see," spokesman Barry Kenny said.

"In light of the current economic environment, Iarnrod Eireann is to consider suspending services on the line in order to generate substantial cost savings."

He added: "We will also continue to explore the possibility of establishing a heritage railway on the route with interested parties, which would be of benefit to tourism in the area."

Fault

Fine Gael transport spokesman Fergus O'Dowd urged the company to examine all ways of saving the service, but said it had to pay for itself.

"I would urge caution because once a line is closed that's it."

Meanwhile, 2,000 commuters in Longford and north Dublin were left without a train service yesterday morning because of a signalling fault.

Services were cancelled between 6am to 7.30am along the northern commuter line and Malahide DART, while inter-city trains did not run from Sligo until 8.30am.

Iarnrod Eireann said 11 trains were taken out of service, with customers in the midlands left without a service in the morning.